YoY: FY25 remittances soar 27% to $38.3bn

ISLAMABAD: Pakistan’s remittance inflows hit a historic high of USD38.3 billion in fiscal year 2025, marking a 27 percent year-on-year surge, but the cost of channeling this money through the Pakistan Remittance Initiative (PRI) has skyrocketed even faster - up 70 percent to a staggering Rs 124.14 billion compared to Rs 72.95 billion in 2024, official documents reveal.

Compared to fiscal year 2024’s USD30.3 billion, the country saw a 27 percent year-on-year increase in remittances, largely driven by inflows from Saudi Arabia, the UAE, the UK, and the European Union (EU) countries, ranking the country as the world’s fifth-largest remittance recipient and second in South Asia.

The State Bank of Pakistan (SBP) noted that the major reasons for the increase in cost during fiscal year 2024 and fiscal year 2025 were: (i) upward revisions in incentives provided under the Transfer to Cash Incentive Scheme (TTCIS) to arrest the declining trend observed in fiscal year 2023 that continued in the early months of fiscal year 2024, (ii) restoration of the Saudi corridor (which accounts for 25 percent of inflows) under TTCIS, (iii) substantial cumulative depreciation (around 60 percent) of PKR vs SAR, ie, the currency of rebate under TTCIS, and (iv) unprecedented increase in remittances after the changes in policy.

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Considering the rising cost for the national exchequer, the Economic Coordination Committee (ECC) of the cabinet, on the recommendation of SBP, has recently rationalized the incentives under TTCIS.

Remittance inflows have surged nearly fivefold since fiscal year 2009, when they stood at just USD7.8 billion to USD38.3 billion in fiscal year 2025. Over the past decade alone, flows have registered a 92 percent growth, surpassing the country’s export proceeds as the largest source of foreign exchange.

The central bank stated that since 2009, PRI has been working towards enhancement of home remittances through formal channels in Pakistan. As a result of active engagements with financial institutions (FIs), the number of FIs on PRI network has increased from around 25 in 2009 to more than 50 in 2024. The FIs include conventional banks, Islamic banks, microfinance banks, and Exchange Companies (ECs).

Further, the Electronic Money Institutions (EMIs) are also allowed to receive home remittances by working through the banks. The number of international entities has increased from around 45 in 2009 to around 400 at present. In fiscal year 2024 alone, around 33 new international entities joined the home remittance business with the Pakistani FIs under the PRI channel.

A parliamentary panel was recently informed that the reward structure — previously set between 20 to 30 riyals per incremental transaction — has now been revised to a flat rate of 20 riyals across all transaction sizes. The minimum eligible transaction threshold is being raised from USD100 to USD200.

Copyright Business Recorder, 2025